January 20, 2012, 2:53 PM — It's been a long time since Microsoft shareholders have had anything to be happy about, but Wall Street's reaction to Redmond's second-quarter earnings should put a (temporary) smile on their faces.
Shares of Microsoft (NASDAQ: MSFT) were up nearly 6% in Friday trading to as high as 29.73 and threatening to exceed $30, a level not seen for the company's stock since May 2010. Even if the stock can't break $30, Friday's high was its best price in 20 months.
Microsoft reported revenue for the quarter ended December 31 of $20.89 billion, up 5% from the year-ago quarter, though just missing analysts' average estimates of $20.93 billion.
However, Microsoft beat earnings estimates of 76 cents a shares with Q2 net income of $6.62 billion, or 78 cents a share, almost identical to last year's $6.63 billion, or 77 cents a share.
Investors appear to be giving more weight to revenue growth in Microsoft's business and entertainment divisions than either the continued revenue decline in the company's Windows division, which posted revenue of $4.74 billion, down 6% from a year ago.
Continued softness in PC sales is expected to put continued downward pressure on the Windows franchise.
Redmond's server and tools division recorded Q2 revenue of $4.77 billion, up 11% from last year, while the business division -- which produces Microsoft Office -- showed Q2 revenue of $6.28 billion, up 3% from a year ago.
Meanwhile, the company's entertainment and devices division, home of Xbox 360, posted revenue of $4.24 billion, up 15% from the year-ago quarter.
That's pretty impressive, and I may have to revise my opinion that this division won't be able to offset the decline in Windows revenue.
Microsoft shares haven't been out of the twenties since May 5, 2010, when they briefly reached 30.09. The stock last fell below $20 in May 2009.